Tax governance

As part of its legal compliance and risk control projects, the group has commenced a process to formalise internal guidelines to organise, define and authorise infragroup transactions.

The aim of these steps is to ensure in the future and to an increasingly structured extent that:

  • infragroup transactions are documented using the appropriate contracts in accordance with the form and substance requirements of legislation in the countries where the group operates;
  • contracts are subject to validation and authorisation by the bodies and organisations responsible for such, in accordance with the accountability structure;
  • infragroup transactions are carried out in accordance with the requirements of effectiveness and economic substance applicable to non-related parties and on an arm’s length basis;
  • fixed considerations for financial transactions are consistent with market rates in accordance with the concept of fair value and with the principles established by international practice authorities.

As a first step in the implementation of this fiscal governance policy, each year, the parent prepares internal transfer pricing documentation pursuant to article 1.2-ter of Legislative decree no. 471 of 18 December 1997, which was transposed into Italian legislation by  article 26 of Law decree no. 78 of 31 May 2010, converted, as amended, by Law no. 122 of 30 July 2010 (the “master file”).

The purpose of the master file is to document how transactions between the group companies are governed on an arm’s length basis in accordance with OECD guidelines.